What's in store for Beam wineries?

The biggest wine deal in Sonoma County history will be finalized this week as Constellation Brands snaps up Healdsburg-based Beam Wine Estates for $885 million.

The transaction, announced last month, is expected to close early this week.

What happens next remains an open question for the company's 520 employees, most of whom still have no idea how their jobs will be impacted by the sale.

Constellation, the largest wine company in the world, is working on an integration plan for Beam's five California wineries, but nothing will be announced until after the transaction closes, said Mike Martin, spokesman for the Fairport, N.Y.-based company.

Included in the sale are such prominent Sonoma County winery names as Clos du Bois and Geyser Peak in Geyserville, Buena Vista Carneros in Sonoma, and Gary Farrell from the Russian River. Wild Horse Winery and Vineyards in Paso Robles is also part of the sale.

A total of 1,500 acres of vineyards are included in the deal between Constellation and Fortune Brands, which analysts believe is selling its wine division to raise cash to buy Absolut vodka.

How those wineries and their 2.6 million cases will be absorbed into a global company that produces 110 million cases remains a subject of intense debate and speculation in Wine Country.

Premature to speculate

There have been "very high-level" discussions about how to integrate Beam's wineries into the Constellation family of wines, but nothing has been finalized, Martin said.

That leaves employees at Beam able to only wait, wonder and, in some cases, worry whether they will have jobs in the new year.

Soon after purchasing the Robert Mondavi Corp. for $1.36 billion in 2004, Constellation laid off a large chunk of Mondavi's management, with 190 people losing their jobs.

Martin said it was premature to speculate on how people's jobs might be affected. Just because Constellation lays off workers at one winery after an acquisition doesn't mean similar measures will be taken at others, Martin said.

"There is no set template for doing this. It's not a one-size-fits-all situation," Martin said.

4 distinct wine groups

How Beam's stable of mid- to high-end brands will mesh with Constellation's massive portfolio also remains to be seen.

The company divides its U.S. wine operations among four distinct divisions that share common finance, human resources and legal services: Centerra Wine Co., North Lake Wine, Pacific Wine Partners and Icon Estates.

Centerra and North Lake are run out of New York, while Icon, the fine wine division, is located in St. Helena and Pacific is run out of Gonzales in Monterey County.

Icon seems the most likely home for several of the higher-end Beam brands, such as the $38-a-bottle Gary Farrell and others such as Buena Vista Carneros and Wild Horse. The 1.6 million-case Clos du Bois, most of which sells in the low teens, and the mid-teens Geyser Peak could find themselves shuttled to Centerra, which manages less expensive brands but also includes one of the most well-known Sonoma County brands, zinfandel specialist Ravenswood.

It's not even a given that the new owner will keep all the wineries it acquires.

Constellation has demonstrated a willingness to shed "noncore assets" such as brands, wineries and vineyards it acquires in major transactions. Following the Mondavi deal, Constellation sold off small brands such as La Famiglia pinot grigio, wineries such as Arrowood, Byron and Freemark Abbey, and hundreds of acres of vineyards.

Martin said Constellation also values good grapes, and owns 11,200 acres of vineyards, mostly in California.

"The quality of the wine is important, so we're looking for the best possible grapes we can find to go in the various styles and prices of wines in our portfolio," Martin said.

Selling strategy

Yet, Constellation found it advantageous to sell some former Mondavi vineyards and lease them back. The tactic frees cash for other purposes, and stockholders generally cheer the move as helping maximize returns.

Vintage Wine Trust, the San Rafael-based wine industry real estate investment group, has purchased three former Mondavi Corp. vineyards from Constellation for $97 million.

One of those, the 588-acre Huichica Hills vineyard, is located right next door to one of Beam's largest vineyard holdings, the 800 acres of Carneros vineyards tied to Buena Vista Carneros.

Constellation leased Huichica Hills back from Vintage Wine Trust for a year. In 2005, Kendall-Jackson founder Jess Jackson, who places a high premium on ownership or direct control of vineyards, signed a long-term lease on the vineyard.

Martin could not say whether Constellation would be looking to shed any of Beam's vineyards, but Joe Ciatti, Vintage Wine Trust's chief executive officer, probably hopes it will.

Ciatti has struggled to grow the trust's vineyard holdings quickly enough. He said he doesn't know if Constellation would be interested in a sale and lease-back, but would certainly be interested in such a deal.

"It fits our profile," Ciatti said.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.

mccallum@pressdemocrat.com.